Idaho State Tax Commission

Tax Update for Summer 2020

Here's the summer 2020 issue of Tax Update — our newsletter for the business community. This edition features articles about new tax laws, Return to Work bonuses for employees, updated withholding tables, guidelines for visiting our offices, online classes, and more!

Help your employees get Return to Work bonuses

We're now accepting applications for Return to Work bonuses of up to $1,500 for your eligible employees affected by the coronavirus pandemic. Your employees can't apply for the bonuses themselves – that's up to you. See who qualifies and get more details at rebound.idaho.gov.

New tax laws — What you need to know

The 2020 Idaho Legislature passed tax laws affecting first-time home buyers, custom meat processing, new data centers, and more. Below are some highlights. For more details about the legislation, see the Legislature's website.

Income tax

Idaho conforms to the Internal Revenue Code (IRC) for 2019

Idaho conforms to the IRC for tax year 2019.

House Bill 380 – Effective January 1, 2020

Income tax credit provided for employer contributions to college savings accounts

Employers can get a tax credit for contributing to an employee's IDeal — Idaho 529 College Savings Program account. The credit is 20% of the employer's total contribution up to a maximum of $500 per employee each year.

House Bill 550 – Effective January 1, 2020

Tax deduction allowed for first-time home buyers

First-time home buyers who establish a First-time Home Buyer Savings Account can deduct their account contributions and interest earned from Idaho taxable income. Individuals can deduct up to $15,000 each year. Married couples filing a joint tax return can deduct up to $30,000 yearly. Learn more about the exemption.

House Bill 589 – Effective January 1, 2020

Sales tax

Exemption for custom meat processing

Custom meat processing and packing services are exempt from sales and use tax when the consumer provides the animal and the meat won't be resold.

House Bill 496 – Effective July 1, 2020

Exemption for certain aircraft sales

An aircraft sale is exempt from sales and use tax when the aircraft is used primarily for agricultural spraying, dusting, and seeding; livestock and predatory animal control; or forest and wildlife conservation.

House Bill 442 – Effective July 1, 2020

Exemption for new data centers

Purchases made to build new data centers and purchases of eligible server equipment are exempt from sales and use tax. Learn more about how to get the exemption.

House Bill 521 – Effective July 1, 2020

Property tax

Veterans benefit expanded

Veterans who receive 100% compensation from the U.S. Department of Veterans Affairs (VA) due to individual unemployability qualify for a benefit that reduces their property tax. That's in addition to the veterans who qualify with a 100% service-connected disability rating from the VA.

House Bill 552 – Effective January 1, 2020

Homeowner's exemption deadline removed

A homeowner can apply for the homeowner's exemption at any time throughout the calendar year, starting in 2021. The previous deadline was April 15.

House Bill 562 – Effective January 1, 2021

Resolution required to use forgone balances

Taxing districts that set budgets for less than the allowed 3% increase can use the difference – called a forgone balance – in a later year if they:

  • Provide notice of their intent to do so and hold a public hearing about it.
  • Adopt a resolution specifying the dollar amount of property taxes they're reserving for future use.

House Bill 354 – Effective July 1, 2020

Property tax notices get additions

Property tax notices sent to taxpayers must include either the expiration date of any bond and voter-approved levy or a link to a website with that information.

House Bill 518a – Effective July 1, 2020

Withholding tables updated for 2020

We've updated the income tax withholding tables for 2020. You don't need to adjust withholding back to the beginning of the year, but please use the revised tables going forward:

For more information about income tax withholding, see our Withholding web guide at tax.idaho.gov/wh.

Free tax webinars for small businesses

Want to learn more about taxes for your small business? Take one of our free webinars and attend from the comfort of your home or office. The classes include:

  • Tax and Business Basics 101 for Small Business (August 26)
  • Tax and Business Basics 101 for Self-Employed (August 11 and September 9)

Visit our Eventbrite page to register and get more details.

Guidelines for visiting our customer-service counters

Our Boise office counter

Our customer-service counters are open to the public in all our offices. We ask that visitors follow social distancing guidelines by staying 6 feet apart from each other and wearing a mask.

Go online to tax.idaho.gov/visit to find office locations and hours. All offices have a drop box for returns and payments.

Time for employees to review their Idaho W-4

Did your employees owe more tax than expected when they filed their state income tax return this year? Did they get a smaller-than-expected refund?

In either case, it's a good time to remind employees about reviewing their paycheck withholding to make sure they have the right amount of income tax withheld from their pay. Updating their Idaho W-4 now will improve their tax situation for next year.

Workers should review their withholding at least once a year or when they experience changes in their lives like marriage, divorce, or having children.

Employees can find guidance and resources for updating their state and federal withholding at tax.idaho.gov/w4. We've updated the Idaho W-4 instructions to include withholding information for employees who are nonresident aliens.

Follow us @idahotax

We've ramped up our social media postings to help you get the tax info you need. We've also added Instagram to the social media channels we use. You can follow us – @idahotax – on Facebook, Twitter, and Instagram.

Stay informed

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Published July 20, 2020

This information is for general guidance only. Tax laws are complex and change regularly. We can't cover every circumstance in our guides. This guidance may not apply to your situation. Please contact us with any questions. We work to provide current and accurate information. But some information could have technical inaccuracies or typographical errors. If there's a conflict between current tax law and this information, current tax law will govern.